Turkmen President Kurbanguly Berdymukhamedov discussed the issue with Myrat Archayev, head of state gas firm Turkmengas, Turkmen state news agency TDH said on Tuesday.
Archayev told Berdymukhamedov that talks had fallen through and the Iranian side had proposed taking the matter to arbitration, according to the report.
Berdymukhamedov ordered him to proceed with the filing.
Turkmenistan cut off gas supplies to Iran on January 1, saying Iran should clear its outstanding debts.
Later, Turkmenistan’s Foreign Ministry said in a statement that the Central Asian country is ready to continue gas talks with Iran, but also has the right to take the dispute to arbitration.
The statement also claimed that Iran’s debt stemmed from the National Iranian Gas Company’s failure to abide by the "take or pay” provision of the gas supply contract.
Iran has imported natural gas from Turkmenistan since 1997 for distribution in the north of the country, furthest from the gas resources in the south.
Turkmens occasionally raise their prices in the wintertime. In 2006, during days of freezing temperatures and blizzard in Iran, Turkmenistan cut off gas shipments and demanded a nine-fold price increase.